How do you know when you’ve finally gained financial independence?
The Duke and Duchess of Sussex, Prince Harry, and his American born wife Meghan Markle’s announcement that they’re stepping back from their role as senior members of the Royal Family have come as a bit of a surprise to the Royal Family. Of course, there has already been a lot of media coverage about the announcement. This coverage includes their choice to work towards financial independence and what it might mean for them.
Currently, the British Royal Family financially supports the couple. In the future, the Crown will fund their activities relating to supporting their Royal charities and any other work they agree to undertake. However, other businesses and (presumably) the running of their home in Canada will be funded by themselves through other means, including their ‘financial independence.’
Aside from the fact that it is an exciting piece of news, the announcement also got us thinking, what do they mean by financial independence, and how will they achieve it?
For regular people around the world, financial independence probably doesn’t include having one of the wealthiest families in the world as a backstop for when things don’t go to plan. The need to become financially independent is often a surprise to many people, without warning or support. In some cases, life throws them in the deep end. Sink or swim. A tough test for many.
What financial independence means
Regardless of whether you’re a Royal or a not, the first thing to understand when it comes to becoming financially independent is understanding what that means to you. In the past, financial independence was that you no longer had to work as you had already generated enough money or income to fund your chosen lifestyle.
Today, however, it can mean several things:
- Securing a job to allow you to pay for your clothing and social life.
- You don’t have to ask parents or family members for money to buy things or pay for transport.
- Enough income to rent a home and support yourself.
- Enough of a deposit to buy a home and live there.
- You no longer need to work.
- You can support your family through your savings and investments.
- You can enjoy retirement from the pension you’ve paid into throughout your time at work and no other income.
As a younger person, under the age of 30, financial independence to most people probably includes moving out of the parental home and being able to support yourself. For older people, over 50, it likely includes no longer needing to work or accumulating a good-sized pension pot to enjoy retirement.
How to become financially independent
If your ultimate life goal is to become a financially independent individual, and you know what that means to you, the next step is to set out to achieve that goal. Of course, this is about money, which means you need to find a way to earn that money to secure the financial independence you’re seeking.
In today’s technologically advanced world, there are many different ways to earn a lot of money. But most of them, require hard work and commitment – or blind good luck. For some people, the first step is to get a well-paid job. For others who are already in employment, they’re searching for a second job or something that can create an extra income.
Some of the more potentially lucrative and relatively simple to start side-jobs include:
- Selling online.
- Short-term let hosting through sites like Airbnb.
- Blogging or Vlogging.
- Transcription work.
- Online tutoring.
You can do this type of work while also doing existing jobs, which means, in theory, you can build up some savings more quickly than just through your regular job. You can then use that money as a deposit for a home, or you can use it for a bigger plan, such as more aggressive investment or to pay for courses to allow you to change your career to a more lucrative one.
For those who put in the hard work and make the best choices, you might achieve your initial financial goals. But, will that mean you’ll pull back and relax a little, happy in the knowledge you’ve completed your aims. Or, will you shift the goal post and aim higher?
Again, the answer will differ from person-to-person. However, whether you stick with your current goal or create a new one, it’s essential to acknowledge, even if it’s just to yourself, that you’ve gained your first financial independence target, and that’s something to be proud of.